Steal from the Poor, Give to the Rich, Harm Them Both

President Trump is correct – “everybody has better health care than the US” (at least in developed countries.) So why does he support the House’s new version of the American Health Care Act, that could kill many thousands of Americans while simultaneously worsening health care for all, including the rich? Statements by people behind the bill give some answers:

You pay for government health insurance like Medicare because pooled insurance is a collective good. Insurance means protection. The lucky pay for the unlucky. That makes life better for all of us. What the House bill signally ignores is what most of the world has known since World War II: national health systems save lots of money, make people safer, and help national economies become more competitive.

Most countries also know a healthy economy requires a healthy population. Sick people are fearful. They don’t work well. They have a hard time becoming entrepreneurs.

Health insurance began in Germany almost 135 years ago because Bismarck needed healthy men for the military and factories. That’s around the same time politicians and economists recognized another corollary: a healthy population requires a healthy environment. Coal ash and other pollutants make people sick, an understanding lacking from recent presidential executive orders.

2. “Good people, who lead healthy lives, shouldn’t have to pay for those who don’t take care of themselves.” Please tell that to the researchers at Johns Hopkins who noted last week that two thirds of cancers arise randomly. Chance is what kills people. The twelve year old with leukemia didn’t cause her tumor. The forty year old vegan marathon runner with pancreatic cancer didn’t cause her tumor.

Yes, you want people to walk to work through safe environments, to eat plants, to not smoke and drink. But a huge part of health is luck. Sheer, uncontrollable luck.

Which was why when Obamacare got rid of pre-existing health insurance exclusions that proved a major step forward. I often remember a woman I treated at the University of Texas, Houston, in the 1980s. She hated her laboratory job, but couldn’t leave it. She had lymphoma. Only the university would provide her health insurance. If the tumor returned and she lacked health insurance, she’d be dead.

Now there will be no need for death panels. Death is baked into the bill (see below.) And the middle class and rich will be affected in ways they have not foreseen.

Medicaid

American health care is a crazy, jerry rigged Rube Goldberg machine. Even health economists can’t figure out how it works. That’s one reason, Michael Mariano points out, why rich people don’t understand how much this bill will hurt them.

One of the effects of Obamacare was to expand Medicaid to nearly a quarter of the population. Almost half of U.S. pregnancies are paid for by Medicaid. Most middle class people regard Medicaid coverage as horrible, but for folks trying to raise kids on three part-time jobs it’s proven a godsend.

The result so far is that expanded Medicaid care has left people healthier. They’ve become more economically productive. Many Medicaid recipients say they greatly appreciate the security of some kind of health insurance.

The new House American Health Care Act wants to wipe out Medicaid for millions, probably tens of millions, while bringing back the good old days of excluding pre-existing conditions (by the way, pregnancy is generally a “pre-existing condition.”) The bill also cuts provisions for prenatal care. Most health economists can tell you that’s stupidity squared. Worse prenatal care means sicker children, sicker and less economically effective for the next eighty years.

The direct population survival effects are harder to gauge. One recently published conservative estimate suggests the decrease in Medicaid coverage might mean 24,000 further deaths every year. That does not take into account the economic costs of increased debility, nor the costs of people thrown off Medicaid coming to emergency rooms for care. Preventive treatment is a lot cheaper than treating diabetic coma in the ER.

Yet cutting Medicaid will also hurt treatment for the rich. American health care is a fragile ecosystem, particularly in rural areas. Many practitioners, especially rural specialists, only survive because Medicaid pays for a sizable proportion of their work. Cut Medicaid, and many rural physicians may move. The hospitals where they work may also disappear.

The return of pre-existing exclusions further poses a threat to all but the superrich. Now health care insurers will be able to offer “cheaper” plans excluding “unnecessary items” like mental health and addiction treatment.

You’re fine, you tell yourself. I’ll never need mental health therapies, even though 30% of the population gets depressed. No one in my family will ever require addiction treatment. My daughter has no plans to get pregnant. Many with well paying jobs may discover, with harrowing and tragic swiftness, how much their health coverage has been gutted.

Follow The Money

If you forget about the direct and indirect economic costs of creating a sicker population, cutting Medicaid as decreed by the House bill may “save” the government 800 billion to a trillion dollars over the next ten years. Will that money go to cutting the Federal budget deficit? Paying for research on more effective public health?

No. The bill specifies where the savings go: no more Medicare surcharge to high earners. Decreased taxes for investment income. The rich, particularly the superrich, will pocket the “saved” money. Which, unlike Medicaid recipients, they will not place immediately into the economy, but instead into the huge global cash overhang held by investors who don’t trust to invest. One reason they won’t put money into new enterprises is the ongoing political and economic uncertainty the House American Health Care Act will increase.

The Way Forward

Should most of America suffer so President Trump and his family will get a tax cut? This may be the time when people start to think of what health care is supposed to be for – health. A population whose physical, mental, social and spiritual well being improves rather than declines. The rest of the world knows better public health most effectively arrives through a national health system, where health is incentivized rather than profiting from greater sickness. To achieve better health in America we’ll need to follow the $3.3 billion a year that goes into the pockets of health insurers, hospitals, Big Pharma, pharmacy benefit managers, device makers and providers – and then follow the money out. Into the lobbyists and dark campaign finance pools that buy the politicians who maintain an insanely wasteful system that economically and socially shackles the country.

The new House bill accelerates our ride over the cliff. Now is the time to put on the brakes.